Dec. 5, 2013

Picketers, many of them American Federation of State, County and Municipal Employees retirees, protest outside the Federal Courthouse in Detroit on Tuesday. / Tammy Stables Battaglia/Detroit Free Press

Written by

The Detroit Free Press Editorial Board

Detroit emergency manager Kevyn Orr sees no way to restructure the city’s debts and liabilities without cutting pension benefits, and U.S. Bankruptcy Judge Steven Rhodes ruled Tuesday that the state’s constitutional protection for pensions doesn’t carry any weight in federal court.

But if the $3.5 billion Detroit owes its pension funds, and the payments it makes to retirees, is reduced, thousands of senior citizens will be left with depleted resources and few options.

It’s unacceptable.

The City of Detroit made promises to its workers, promises it can no longer keep. And in 1963, the residents of Michigan chose to approve a constitution that protected pensions.

Gov. Rick Snyder took an oath to uphold that constitution. And now he must. That’s the thing about oaths. You have to keep them, even when it’s difficult, or inconvenient. Or not politically expedient.

Michigan Attorney General Bill Schuette knows it — he’s said he’ll support the state constitutional protection for pensions, and is planning to file a state court appeal to Rhodes’ ruling that the bankruptcy court need not honor that protection.

Schuette needs Snyder’s backing.

Rhodes’ ruling doesn’t invalidate the state’s constitutional protection of pensions, as some have suggested. Think of it as parallel legal universes: In federal bankruptcy court, Rhodes affirmed a power that court has always had — the ability to alter contracts. But in the world of the state, for state officials bound to uphold Michigan’s laws, the constitution holds the same power it did before Rhodes’ ruling.

But if Schuette is unsuccessful in his appeal, Snyder must step in. Even if that means picking up the tab for Detroit’s pension debt.

The governor has displayed a relentlessly, grindingly positive attitude toward the city of Detroit, speaking frequently about the importance of the city to the state and to the region.

But he’s mealy-mouthed when asked what, exactly, he will do to help Detroit.

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Snyder says the city must be rebuilt, that Michigan is the comeback state and that Detroit is an integral part of Michigan.

Yet when it comes to pledging to help in any kind of meaningful, tangible way, Snyder dodges. No bailout for Detroit. No financial help for the city, not even for pensioners already in, or on the edge, of poverty.

These pensioners are Michiganders.

Orr has said he doesn’t plan to ask Snyder for help, that the kind of money it would take to plug the hole in Detroit’s pension funds isn’t available, even at the state level.

That’s a false argument.

To save Detroit’s most vulnerable pensioners, the state doesn’t need to cut a $3.5-billion check, and that’s something both Orr and Snyder are savvy enough to know.

The amount the city owes its two pension funds is disputed — Orr’s analysts say $3.5 billion, the funds say $644 million. Any cuts to that debt would apply only to the unfunded portion of the pension systems’ assets. But Detroit retirees can’t afford to lose much. The average general system retiree’s benefit is less than $20,000 a year. For police and fire retirees, it’s about $34,000. These same retirees will have to absorb increased health care costs, starting March 1, as the city alters those benefits.

Orr has talked about creating “tiers” of pensioners, but it’s unclear, as of yet, what he means by that. It’s not difficult to envision that cuts could be softened for Detroit’s oldest, poorest pensioners. Or that the state could issue bonds, backed by state resources and by the revenue Orr hopes to reclaim.

There are options, and in the months ahead, Snyder and Orr have to choose an option that serves all Detroiters, who are, after all, Michiganders.

This is no trivial matter. If Snyder blows through a constitutional obligation — enshrined in the very document that gives him the authority to govern — or comes up with a cowardly way to avoid it, it would de-legitimize his authority as the state’s chief executive, and make him into the “dictator” his harshest critics already believe him to be.

Imagine the outrage if a governor simply chose to assign no meaning to other parts of the state Constitution — like the equal protection clause or free speech provisions. It wouldn’t be tolerated, and nor should any notion of ignoring the constitutional obligation to honor public pensions.

This is a test of Snyder’s leadership, a measure of his ability to win a potentially unpopular fix in order to fulfill a constitutional promise.

Here, he has to think bigger than party or special interest, bigger even than his own legacy.

He needs to think about the law of the land, and what damage he could do to us all if he tosses it aside.